Three UK Secure Key Change to Boost 5G Wireless Broadband Plans

Ofcom has granted a small but controversial change to the part of the 3.6GHz band owned by mobile operator Three UK (H3G, UK Broadband Ltd.), which will give them access to a 100MHz block of contiguous spectrum that may result in faster 5G based mobile and fixed wireless networks. But BT, O2 and Vodafone aren’t happy.

Last month Three UK announced that they were committing £2bn to support the start of their commercial roll-out of future 5G based mobile and ultrafast “home broadband” technology, which will get underway from the second half of 2019 (here). Key to this is the fact they already have a lot of 5G friendly radio spectrum bands to their name (i.e. some frequency slices at 3.4-3.6GHz and a bit of 3.9GHz, 28GHz and the 40GHz band).

However today’s announcement concerns the spectrum around their slice of the 3.6GHz band. Under UK Broadband Ltd. they hold spectrum licences that authorises them to use 168MHz of radio spectrum in two separate 84MHz blocks at 3605 – 3689MHz (“lower frequency block“) and at 3925 – 4009MHz (“upper frequency block“).

Crucially they also have a 20MHz slice of spectrum at 3580 – 3600MHz, but at present a gap of 5MHz stops this from being linked up with their aforementioned lower block (they’ve also got 40MHz in 3.4GHz but that’s not relevant today). Three UK wanted to change this in order to create one big slice of contiguous spectrum (100MHz) and now they’ve got their wish.

The Approved Changes

• to shift its lower frequency block down by 5 MHz to make it adjacent to the 20 MHz spectrum block licensed to UK Broadband at 3580 – 3600 MHz;

• to reduce its frequency holding in the lower frequency block by 4 MHz, so that it would hold 80 MHz from 3600 – 3680 MHz (rather than 84 MHz from 3605 – 3689 MHz);

• to align the technical requirements that would apply to the frequencies 3600 – 3680 MHz with the technical requirements that currently apply to the UK Broadband licence in the 3.4 – 3.6 GHz band; and

• to allow a transitional period during which UK Broadband would continue to be authorised to use 3605 – 3689 MHz under the current technical requirements, whilst also being authorised to deploy 3600 – 3680 MHz under the new technical requirements. This transitional period would end from the later of 1 September 2019 or nine months from the date of the licence being varied..

Wireless networks much prefer having access to a large contiguous block of spectrum, which as Ofcom says would enable them to “offer increased peak speeds by using a larger carrier and potentially better coverage by having higher in-block power levels.” The alternative to this change would have been to auction off the 5MHz that split their bands and Ofcom didn’t feel that was necessary.

Ofcom Statement

We do not consider it likely that any benefit to H3G of gaining access to 100 MHz of contiguous spectrum, as opposed to separate 84 MHz and 20 MHz blocks, would be so significant as to provide H3G with an unmatchable competitive advantage over its competitors.

Further, even if H3G were to gain a substantial advantage, we consider it would be unlikely to be enduring as other providers will have opportunities to win spectrum in the future award. We therefore do not consider the proposed variation would be likely to have an adverse impact on competition such that we should not consent to the variation.

Finally, we have considered whether the variation would have an adverse impact on other spectrum users, and have provisionally concluded that it would not.

Meanwhile Three UK’s rivals have openly disagreed with Ofcom’s approach. BT (EE) felt as if the licence variation “would convey significant commercial advantage to Three … in terms of improved network costs and service offering,” while O2 “strongly objected” for similar reasons and warned it was “inconsistent with Ofcom’s statutory duties, including its obligations to promote competition and the efficient use of spectrum.”

Similarly Vodafone complained that Ofcom had given “undue emphasis to one duty – spectrum efficiency” and had not carried out an adequate competition analysis. “Ofcom could critically damage the nascent 5G marketplace,” warned the operator.

Three UK has previously criticised Ofcom for allowing EE and Vodafone to hold too much mobile spectrum (even though they could have bid for more of it if they really wanted), so perhaps part of this reflects Ofcom’s way of addressing that concern. No doubt Three’s rivals will look to correct for this decision when the next batch of auctions occur in 2019.